Ultra-High-Yield Pipeline Stocks: Why Western Midstream and Enterprise Products Partners Are Building a Bulletproof Dividend Portfolio

In an era where economic growth is slowing and volatility reigns, investors are increasingly turning to sectors that offer stability, predictable cash flows, and long-term yield security. Midstream energy companies like Western Midstream Partners (WES) and Enterprise Products Partners (EPD) are emerging as standout performers, combining fee-based revenue models with strategic innovation to create a “bulletproof” dividend portfolio. Let's break down why these two titans are worth a closer look—and how they're positioning themselves to thrive in a low-growth economy.

Cash-Flow Resilience: The Bedrock of Dividend Security

Pipeline and midstream operators are inherently insulated from commodity price swings because they earn fees for transporting, processing, and storing energy, not for the energy itself. Western Midstream exemplifies this model. In Q2 2025, the company generated $617.9 million in Adjusted EBITDA and $388.4 million in Free Cash Flow, even after paying a $0.910/unit distribution (annualized at $3.64). This translates to a 1.1x coverage ratio, ensuring the dividend is well-supported.

What's more, WES's $1.275 billion to $1.475 billion Free Cash Flow guidance for 2025 underscores its ability to retain capital for growth. With a $33.1 million Free Cash Flow surplus in Q2 alone, the company is not just sustaining its payout—it's building a buffer for future reinvestment.

Meanwhile, Enterprise Products Partners reported $1.9 billion in Distributable Cash Flow (DCF) for Q2 2025, with a 1.6x coverage ratio for its $0.545/unit distribution. EPD's $4.0 billion to $4.5 billion capex plan for 2025 is funded by its $5.1 billion in liquidity, ensuring it can fund growth without overleveraging. Both companies are demonstrating that even in a low-growth environment, fee-based models can deliver consistent returns.

Produced Water Innovation: A Game-Changer for Margins

One of the most overlooked yet critical areas in midstream is produced water management—a sector where both WES and EPD are making waves.

Western Midstream's $2 billion acquisition of Aris Water Solutions is a masterstroke. Aris specializes in treating and reusing produced water, a growing necessity as oil and gas producers face stricter environmental regulations and rising water disposal costs. This acquisition is projected to add $40 million in annualized cost synergies and boost WES's Free Cash Flow by 2026. With produced water volumes expected to rise alongside U.S. oil production, WES is locking in a high-margin, long-term revenue stream.

Enterprise isn't far behind. Its Neches River Terminal (NRT) in Texas, which includes a 120 MBPD ethane refrigeration train, is a testament to its ability to monetize byproducts of oil and gas production. By expanding its water-handling capabilities and integrating downstream infrastructure, EPD is capturing value from every drop of hydrocarbon.

Long-Term Yield Security: Building for the Future

The key to a bulletproof dividend portfolio is growth—and both WES and EPD are investing aggressively in projects that will drive cash flows for years.

Western Midstream's 300 MMcf/d cryogenic gas processing train in the Delaware Basin and its $625 million to $775 million capex guidance for 2025 are designed to scale throughput. With natural gas and crude oil volumes up 3-6% sequentially in Q2, WES is proving its ability to grow organically while maintaining a low-risk balance sheet (investment-grade credit ratings and a debt-to-EBITDA ratio under 4x).

Enterprise's $6 billion in 2025 growth projects—including two new Permian Basin gas processing plants, the Bahia NGL pipeline, and Frac 14—will expand its footprint in the U.S.'s most prolific energy basin. These projects are expected to add $1.5 billion in incremental DCF by 2026, ensuring the company can sustain its 3.8% distribution growth and continue buying back shares.

Why This Matters in a Low-Growth Economy

When growth is constrained, investors need companies that can generate cash without relying on macroeconomic cycles. Both WES and EPD deliver this through:
- Fee-based contracts that provide stable cash flows.
- Strategic acquisitions (like Aris Water) that diversify revenue streams.
- Debt management that prioritizes liquidity and credit ratings.

Moreover, their focus on produced water and byproduct monetization taps into a $100+ billion market, creating a moat against margin compression. As energy demand shifts toward cleaner technologies, these companies are adapting—proving they're not just “old economy” relics but innovators in the energy transition.

The Verdict: Buy and Hold for Dividend Growth

For income-focused investors, WES and EPD offer a rare combination of high yields, strong cash-flow coverage, and growth potential. Western Midstream's 3.64% yield and Enterprise's 4.18% yield (as of Q2 2025) are attractive, but the real appeal lies in their ability to compound value through disciplined reinvestment and strategic expansion.

Final Take: In a world where growth is elusive, these pipeline giants are building a fortress of cash flow and innovation. With their eyes on the future—and their balance sheets in excellent shape—WES and EPD are not just surviving the low-growth economy; they're thriving in it. For those seeking a bulletproof dividend portfolio, these are names to own—and hold for the long haul.